Cognitive Options Group, a national consulting firm specializing in Mortgage Due Diligence and Compliance Reviews based in Lakewood, Colorado has announced that they now provide an online training solution to the financial services industry. The training is designed to help non-bank residential mortgage lenders and originators (RMLOs) comply with the rules issued by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), requiring RMLOs to establish anti-money laundering (AML) programs and file suspicious activity reports (SARs).
The industry continues to see historic low interest rates in early 2015 and the need for proper management of AML/SAR’s policy and procedure is critical. With this expansion of volume comes increased regulatory risk and originators must be vigilant in meeting new regulatory and investor rules.
“As regulatory compliance for real estate financing has become more complex, the need for lenders and management to understand the volatile rule making environment is critical,” said Michael S. Richardson, Managing Director of Cognitive Options Group, LLC. “Growing fiduciary responsibility for all mortgage related leadership increases the need to engage mortgage industry experts for guidance.”
Cognitive Options Group’s comprehensive BSA/AML training program is tailored to help RMLOs meet the FinCEN requirements. The on-going employee training program was written by Cognitive Options Group’s Managing Director, Michael S. Richardson,“Author of An American Epidemic, Mortgage Fraud a Serious Business".
The objective of this training curriculum is:
• To provide an understanding of money laundering and how it can impact an organization
• To provide an understanding of loan fraud
• To provide an understanding of statutory and regulatory issues
• To understand the required components of an AML program
• To recognize the high risk customer
• To review customer due diligence
• To recognize red flags signifying unusual or suspicious activity
• To understand reporting and record keeping requirements under the Bank Secrecy Act.
The training curriculum offers:
• Accurate, complete and up-to-date content
• Flexible, innovative e-learning that engages and motivates employees
• Industry-leading Learning Management System (LMS)
• Documented training results that reduces risk for the lender
• Consistent message across the corporate footprint.
“With our experienced consulting team, comprehensive due diligence and compliance services and as a leader in serving the financial services industry, we’re uniquely qualified to design and provide the training programs needed to meet our client’s requirements to be compliant,” said Richardson. “These continue to be important rules for RMLOs, and this training will assist our clients in meeting the annual requirements.”
For all RMLOs, use this as a reminder of your compliance obligations under FinCEN's regulations that testing annually is recommended, but not later than every eighteen months. An audit of the procedures detailed in a RMLOs policy and procedures must be conducted either internally, in accordance with FinCEN guidelines, or, in accordance with FinCEN guidelines, by an independent, external auditor entirely independent of the BSA Officer.
The results of the audit must be reported to the audit committee of the RMLO’s Management and the BSA Officer. It is the responsibility of the BSA Officer to take appropriate action to correct any problems found as a result of the audit and promptly respond to the RMLO’s audit committee.
The annual testing and AML/SAR’s program must include at a minimum:
• The developed detailed policies and procedures
• The designation of a compliance officer to oversee the policies
• An on-going employee training program
• Incorporate independent testing to monitor and maintain the program.
An important distinction of this regulation is that The Internal Revenue Service (‘‘IRS’’) is the delegated authority under this regulation, not the CFPB. The IRS will examine for compliance with FinCEN’s regulations those financial institutions that are not examined by a Federal functional regulator.
Failure to comply constitutes a violation of the BSA, exposing the company to civil and criminal penalties. The severity of the penalties depends on the specific circumstances. Civil penalties can include a fine of $25,000 per day from the date of mandatory compliance, August 13, 2012, and criminal penalties can include imprisonment for up to five years.
Cognitive Options Group’s proprietary software tools and review procedures can assist in avoiding heavy fines and reputational risk that could threaten an institution that does not fully comply, particularly if it is publicly learned that money laundering or terrorist financing was undetected due to weak monitoring and controls.
Due Diligence happens naturally during the loan underwriting process. However, it has been noted that the level of due diligence that is performed varies greatly in identified RMLO institution's AML/SAR's program. Every RMLO should incorporate a comprehensive due diligence program as they are required to identify suspicious activity and submit suspicious reports. Not only should loan staff be educated about what to look for, but they should be equally educated on how to report suspicious activity within the institution activity reports (SARs). A control breakdown commonly noted is ineffective or inefficient reporting of suspicious activity by loan personnel. Not only should loan staff be educated about what to look for, but they should be equally educated on how to report suspicious activity within the institution. This education helps to ensure a seamless process that will eventually result in either documentation of rationale supporting why certain activities are not suspicious or the filing of a SAR.
About Cognitive Options Group, LLC
Cognitive Options Group (cognops.com) is based in Lakewood, CO and utilizes proprietary software tools to help financial institutions determine if loans have been underwritten to risk tolerances, guideline and program requirements (Prime, Subprime, VA and FHA), and compliance with GSE, QM, federal, and state regulations. Cognitive Options Group also provides companies with operational, transactional, and professional compliance services. We provide entire or specific outsourcing of risk management for our clients’ regulatory compliance function and its requirements. We provide a complete regulatory compliance program that includes risk assessments comprised of program development, implementation, and administration. We can supplement our clients’ internal resources to discover, review and provide a Best Practices solutions to specific regulatory compliance issues. We serve as an independent assessor of mortgage compliance procedures, to identify challenges, and propose revisions to policy and procedures.
To facilitate our client’s success, we believe we must rigorously uphold our core values. We maintain these standards consistently so you can always trust that our teams are more than a collection of individual perspectives. They represent one mindset…that of Cognitive Options Group, LLC.